C0064 M25 (Area 5) and A249 (Area 34) DBFO Contracts

National Highways entered in to the M25 Design, Build, Finance and Operate (DBFO) Project (The Project) in April 2009. The DBFO Co are 'Connect Plus', a consortium of Balfour Beatty, Egis, Edge Orbital Holdings and others. The main supplier to Connect Plus is 'Connect Plus Services' (a company that includes Balfour Beatty, Atkins and Egis Road Operation UK).

The Project initially included an identified Programme of major motorway widening and other capital works and the routine, winter and major maintenance of Highways England Area 5 and the existing Dartford Crossings (together, the Project Road). In addition, the DBFO Co works with National Highways in managing the day-to-day operations on the Project Road.

The A249 Stockbury to Sheerness project is a DBFO contract which the National Highways awarded under a PFI contract in 2004. The DBFO Co are SheppeyRoute Limited, a consortium of Infrared Capital and 3i Capital. The project is managed on SheppeyRoutes behalf by IML and their main supplier is F M Conway.

The project involved the construction of the 5km long A249 Iwade Bypass to Queenborough Improvement including a new major crossing of the Swale. The project also includes the ongoing routine, winter and major maintenance of the A249 between the M2 and Sheerness.

Both contracts run for a period of 30 years and the initial capital works are complete.

As a consequence of developer led investment in the South East and capital works being undertaken the Government's Road Investment Strategy both contracts are facing a significant volume of change.

National Highways is subject to increasing scrutiny of our performance and the quality of service we deliver to customers. The operational performance of our DBFO Contracts contributes to this and we need to ensure that the service being delivered meets contract requirement and customer expectations.

Significant risk has been passed over the DBFO Co's through these contract arrangements and we wish to ensure that this risk transfer remains effective, the projects continue to deliver value for money, remain sustainable and that the DBFO Co's stewardship of highway assets is appropriate.

The day to day activities of the current supplier of contractual advice and support includes providing advice and challenge with regards to incorporating change in standards/ industry practice into the DBFO contract as well as other improvement work changes. This advice includes assessing the impact of ongoing and future operation and maintenance costs, which once agreed are incorporated into the financial model by the DBFO co and checked by our supplier. They review and advise National Highways on the asset management, commercial and service delivery approaches of the DBFO Companies.